Case Study Of Xinyu Iron And Steel Co.,Ltd Convertible Bond

Convertible bond is a kind of relatively mature hybrid financial derivatives at the international capital market, which is based on corporate bonds, with conditions of equity, the holder is allowed to convert the convertible bond into the stocks of issuers in a certain period and according to the price of appointed. The mid nineteenth Century, The United States issued the first of convertible bonds in the world, which has nearly 170 years of history on the international financial markets. From the mature financial markets in developed world to see, convertible bond works as a mixed financing tool of both options and bonds, which has achieved a rapid development and become the first choice for the certain types of companies' financing.However, unique background of development of securities market in China, led to the listed companies' refinancing of excessively high equity financing. Equity financing is directly related to expand the scale of the company's share capital rapidly, the share price to malignantly fall down. Convertible bonds which is the urgent need of the listed company to alleviate the pressure of the equity financing expansion become a new refinancing channel. In 2000 s, with the appearance of Shen Baoan convertible bonds, China has also the first convertible bonds. In 20 years of development, because of the shorter time to be issued in China, the macro-economic environment in China is not perfect, the development of convertible bond's financing in China is not yet mature. We must continue to sum up and explore.Take Xinyu Iron and Steel Co.,Ltd Convertible Bond as an example, it depends on the analysis of existing circumstance, Xinyu Iron and Steel Co.,Ltd Convertible Bond ended in failure. This case contains the most common problems of the listing Corporations in China. At the same time, this case deserved to be learned by us. First of all, according to the theory and data, I made a depth analysis about the reasons of Xingang's selection. Secondly, based on the overall grasp of convertible bonds, which includes valuation methods, I also made an indepth study of the new application of convertible bonds, including the issue of timing, process and effect. Finally, I pointed out some new problems of convertible bonds, which included unreasonable price, improper time,single terms and imperfect market environment and so on. Meanwhile, further to make an extension, I am linked to the widespread financing problems to put forward the corresponding solution, including design the convertible bond issue terms reasonably, strengthen risk awareness, choose the proper time to issue convertible bond, perfect Convertible bond information disclosure system, and perfect internal governance. Due to the representative of Xingang convertible bonds, the case study summary for the problems of listed companies in China using convertible bonds financing has general applicability, it also provides a reference for others to choose convertible bonds financing.